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Spain Has EU’s Largest Deficit, Undermining Rajoy Pickup




Spain’s budget deficit was the largest in the European Union last year, underlining the challenge faced by Prime Minister Mariano Rajoy as he prepares a new plan to foster an economic recovery. Eurostat, the EU’s statistics agency in Luxembourg, today reported that Spain’s 2012 deficit widened to 10.6 percent of gross domestic product, swollen by the cost of bailing out its banking system. That’s up from 9.4 percent in 2011 and is worse than Greece ’s 2012 budget gap of 10 percent. A limit of 3 percent of GDP is imposed by the EU on all members.

Rajoy pledged last week to unveil measures on April 26 to make the euro region’s fourth-largest economy more flexible and competitive. That announcement will end a week of reports ranging from a first-quarter GDP estimate to data showing whether unemployment has reached another record. European stocks today rebounded from the biggest weekly drop in five months as Italy elected a president and the Group of 20 nations offered no opposition to Japan ’s stimulus policies. The Stoxx Europe 600 Index (SXXP) was up 0.9 percent at 11:48 a.m. in London . The euro was down 0.1 percent at $1.3041. Rajoy is bidding for more time from EU peers to reorder public finances as he aims to end a six-year economic crisis, aided by the European Central Bank’s pledge to do whatever it takes to preserve the euro. International Monetary Fund Managing Director Christine Lagarde said last week that the Spanish government needs more time to reduce its deficit. Structural Improvement “Spain needs another two to three quarters to fully reassure investors,” said Gilles Moec , co-chief European economist at Deutsche Bank AG in London. “Beyond the ECB’s support, it must prove the economy’s improvement is structural and that the bank recapitalization is […]



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